Explained: 3 tailor-made savings schemes for your child
The sooner you start investing for your child, the better it is since the power of compounding turns a small amount into a big one
Planning for your child’s future from a very early age is always a prudent practice. The sooner you start investing for your child, the better it is since the power of compounding turns a small amount into a big one. Banks offer multiple types of recurring deposit schemes mainly targeting this section. But three major banks are offering special deposit schemes only for children. Here’s a quick look.
ICICI- Child education plan
The account can be opened in the name of the minor by a parent or guardian. The deposit tenure options available vary from four years to 10 years and the investment tenure is for three years, which can be increased in multiples of three months up to five years.
The minimum deposit amount is Rs 500, which can be increased in multiples of Rs 100. The minimum tenure of the payout phase is one year. Other features available with the child education plan are easy loan on deposits, premature closure and partial withdrawals.
For deposits below Rs 1 crore, the interest rate varies between 7.25% and 7.50%. For deposits of Rs 1 crore and above, the interest rate varies from 7.35% to 7.60%.
PNB – Bal Vikas deposit scheme
This plan is provided as a combination of an income-cum-fixed-deposit scheme and a recurring deposit scheme. The minimum recurring deposit amount required every month is Rs 1,000, which can be raised in multiples of Rs 500 during the first five years of the deposit tenure.
The recurring deposit scheme can be adopted for five years and the income option fixed deposit can be taken for an additional five years. Income options available to deposit holders are either quarterly or monthly at 8% per annum basis.
TMB – Kids RD scheme
South India-based Tamilnad Mercantile Bank offers complete financial support to meet the cost of higher education for children. Account holders, who make regular payments towards a kid’s RD scheme, can easily get education loans sanctioned from the bank itself. The tenure varies from one year to 10 years.
The minimum investment sum is Rs 10,000, with no upper cap. The interest rates offered by the bank varies from 5.8% to 7.8%.